Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — FY2023 Earnings Presentation
47 slides from Flight Centre Travel's earnings presentation, Aug 30, 2023
Slide 1: FLT: FY23 Full-Year Result Presentation
FLT: FY23 Full-Year Result Presentation August 30, 2023
Slide 2: Agenda: Today’s presentation
Agenda: Today’s presentation Adam Campbell Chris Galanty James Kavanagh Graham “Skroo” Turner Global CFO CEO – Corporate CEO – Leisure Global MD & CEO FY23 Results & Highlights Strategic Overview & Update Strategic Overview & Update FY24 Outlook (Section 1) (Section 2) (Section 3) (Section 4)
Slide 3: Section 1: Results & Highlights
Section 1: Results & Highlights
Slide 4: FY23: Results & Highlights
FY23: Results & Highlights Financial Snapshot TTV: $22b – almost 115% year-on year (YOY) growth Sharp TTV Recovery Trajectory ✓ • • 2nd strongest full year result achieved (behind FY19) Record corporate TTV of $11b 25.0 20.1 21.8 23.7 21.9 19.3 20.0 17.6 ‒ 96% above prior year 16.1 15.3 ‒ 24% above
Slide 5: FY23: Highlights
FY23: Highlights Industry Dynamics Improving 01 Competition & capacity in aviation sector gradually increasing, airfare prices starting to stabilise & tipped to decrease modestly in near-term Successful Strategic Execution 02 Achieving key objectives & delivering stronger results in an improved (but
Slide 6: FY23: Industry Dynamics Improving
FY23: Industry Dynamics Improving Travel patterns gradually returning to normal ✓ Industry recovering in line with expectations – activity gradually increasing with full recovery globally expected in CY24 (Source: IATA) ✓ International air traffic circa 90% of pre-COVID levels in June 2023 after sta
Slide 7: FY23: Executing Global Strategies
FY23: Executing Global Strategies Financial Operational ✓ Cost Control: Maintaining a ✓ Corporate Business Growing to Win: structurally lower cost base (circa 75% Outpacing industry recovery by of pre-COVID) while investing in future delivering record TTV & record growth drivers – people, products,
Slide 8: FY23: Efficiency Gains
FY23: Efficiency Gains Underlying cost margin at record low • 9.6% FY23 result compares to 11% underlying cost margin pre-COVID (FY19) & 400bps improvement on FY22 (13.6%) • Reflects ongoing cost discipline, productivity gains & growth in lower cost, highly scalable businesses & channels Revenue mar
Slide 9: FY23: Profit Turnaround Gaining Momentum
FY23: Profit Turnaround Gaining Momentum 400 basis point improvement in underlying PBT margin with solid 2H uplift after breakeven 1H • 0.5% underlying FY23 result – stronger 2H margin (circa 1%) after 0% 1H margin uPBT Margin % by Fiscal Year and Half-Year • 400 bps year-on-year turnaround (FY22: -
Slide 10: FY23: Profit & Loss
FY23: Profit & Loss FY23 Analysis • TTV recovery towards pre-pandemic levels driven by increased volumes & higher than normal fares • Heavy 2H TTV & profit weighting reflects traditional seasonality & stronger recovery trajectory as the year progressed & as travel restrictions were lifted • Strong E
Slide 11: FY23: Operating Cost Efficiencies
FY23: Operating Cost Efficiencies FY23 Analysis • Total operating expenses tracking at circa 75% of FY19 levels • Capacity to service further TTV & revenue without materially increasing costs – particularly in corporate where we have pre- invested for growth over the past 12-months • Employee costs
Slide 12: FY23: Balance Sheet
FY23: Balance Sheet FY23 Analysis • Circa $1.4b cash and investments at 30 June 2023. • Client creditors has increased due to higher turnover, plus the acquisition of Scott Dunn. • Contract assets includes volume incentives, which have increased with TTV., that were earned during the year but payabl
Slide 13: FY23: Cash Flow
FY23: Cash Flow FY23 Analysis • Strong operating cash inflows of $156million generated for the full year – including $248million inflows during H2 after net outflows in H1 • Return to normal operating cash flow patterns with FLT accumulating cash during peak 2H booking periods for payment to supplie
Slide 14: Capital Allocation Framework
Capital Allocation Framework Maximising shareholder returns & long-term growth while balancing a conservative capital structure underpins FLT’s capital allocation framework Portfolio growth Business reinvestment Transformation & optimisation 2% Underlying PBT margin by 2025 M&A opportunities EPS gro
Slide 15: Near-term capital management priorities
Near-term capital management priorities FLT intends to resume a structured shareholder return policy from FY24 onwards after paying FY23 final dividend Capital management plan reinstated with 50-60% of NPAT to be returned to shareholders as dividends and/or used to buyback ordinary shares or Convert
Slide 16: Section 2: Strategic Overview & Update - Corporate
Section 2: Strategic Overview & Update- Corporate
Slide 17: Corporate: Business Overview
Corporate: Business Overview A leading & rapidly growing global travel management company with a compelling customer offering Strong Organic Growth Profile Geographical Diversity ✓ Gaining market-share through high customer retention rates + large pipeline of new account wins CORPORATE TTV FY23 ✓ Re
Slide 18: Corporate: FY23 Update
Corporate: FY23 Update Continuing to outpace industry recovery – growing to win 1 • Surpassed previous TTV record by 23.6% with new milestones established in all 4 geographic regions: − EMEA +59% on previous record − Asia +24% − Americas +15.6% − ANZ +10.5% • New account pipeline (circa $2.6b during
Slide 19: Summary: Corporate FY23 Scorecard
Summary: Corporate FY23 Scorecard Transaction Volume Income Per Cost Per Transaction Customer Retention New Business Won Transaction +72% +10% -10% 96% $2.6b Estimated across FCM (contracted) & Corporate Compared to FY22 Compared to FY22 Compared to FY22 Among contracted clients Traveller (non-contr
Slide 20: Our Customer Strategic Factors
Trends OurCustomer Strategic • Activity Factors Enter your subhead line here Gradual increase in activity since border restrictions were lifted, but likely to remain below pre-pandemic levels in near-term – early indications that companies typically expect to spend more during FY24 • GBTA predicts f
Slide 21: Key Drivers
Key Drivers Continued organic sales growth Investment in leading Sales & Marketing Machine (Digital High customer retention rates Secure pipeline of new TTV from recent account wins marketing, CRM, BDMs) Greater efficiency/Scale benefits Continuing to reduce costs per transaction - people network no
Slide 22: Corporate Traveller: Recovering Strongly
Corporate Traveller: Recovering Strongly Emerging from the pandemic in a position of strength - well placed to benefit as customers continue to seek expert managed travel solutions • Strong geographic footprint built around key hub cities in six countries (USA, UK, Australia, Canada, New Zealand & S
Slide 23: FCM: The Alternative to Traditional TMCs
FCM: The Alternative to Traditional TMCs Leading global player in a sector that offers high barriers to entry ✓ TTV increasing rapidly • Now contributing more than 60% of FLT's corporate TTV – bolstered by addition of high profile, enterprise-level accounts • Wins during past 3 years translating int
Slide 24: Section 3: Strategic Overview & Update - Leisure
Section 3: Strategic Overview & Update - Leisure 24 | FCTG
Slide 25: Leisure: Business Overview
Leisure: Business Overview A quality, diverse portfolio with a leaner cost base & scalable offerings Mass Market Luxury Complementary Independent B2C B2B Specialist brands: The fastest growing community Global omni-channel travel The leading network of Cruise & Touring of independent travel retailer
Slide 26: Leisure: Ongoing Model Shift
Leisure: Ongoing Model Shift Low cost, highly scalable models expected to deliver 33% TTV in FY24, compared to 13% of TTV in FY19 FY19 TTV FY23 TTV FY24 TTV Forecast 3% 16% 15% 10% 3% 15% 18% 69% 67% 84% Employee Based Model Independent Agent Model Online Other Employee Based Model Independent Agent
Slide 27: Leisure: Key Drivers
Leisure: Key Drivers Global expansion of core offering Physical Expansion Start Up Grow winning models in core markets (consultants, teams, independent agents) Cruiseabout B2C & CruiseHQ wholesale B2B Investing in customers Digital Experience Products Customer Loyalty Solutions (Omni channels - Inst
Slide 28: Leisure: FY23 Trading Update
Leisure: FY23 Trading Update Strong TTV growth, returning to profit • $10b FY23 TTV, up 162% on FY22, with Leisure generating 46% of Group FY23 TTV • Record contributions from luxury, leisure online & independent agency businesses • 2H momentum - generated $129m underlying EBITDA to bring FY23 resul
Slide 29: Leisure: FY23 Summary Scorecard
Leisure: FY23 Summary Scorecard GROW OUR 4 LEISURE PILLARS SHIFT IN MODEL V PRE-COVID OMNI EXECUTION FY22 FY23 FY19 FY23 FY22 FY23 Mass – Flight Centre $2.4bn $6.1bn Employee 84% 69% Leisure Online TTV $750m $1.6bn Luxury $0.2bn $0.8bn Independent Agent 3% 15% FCB AU Store ABV (June) $4.0k $5.5k Ind
Slide 30: Leisure: Driving Ancillary Revenue
Leisure: Driving Ancillary Revenue • Continuing to proactively grow revenue with a focus on increased components per booking and ancillary product sales across all Leisure brands • FCB relaunched the exclusive Captain’s Pack, 3 price points with added value, such as waived fees and lost baggage trac
Slide 31: Leisure: Scott Dunn Update
Leisure: Scott Dunn Update • Strategic investment in luxury travel business delivering strong early returns • Trading in line with expectations • New York office now open with team starting this month, leveraging FLT’s existing America’s property infrastructure & other shared services • Unlocking ad
Slide 32: Leisure: Customer demographics less affected financially
Leisure: Customer demographics less affected financially • Challenging economic environment for some age groups • FCTG customers less affected by interest rates with >60% of FCTG customers 50+ years of age • According to CBA data this demographic are spending more, have greater deposit balances, sav
Slide 33: Leisure: Customer Trends
Leisure: Customer Trends • Diverse and growing customer base: MoM growth • Flights +: Continuing to see an increase in components per booking, now at 2.6 in FCB stores globally in June up from 2.1 in prior year. Our customers are adding more ancillaries such as Captain’s Pack to their bookings • Lar
Slide 34: Section 4: Outlook
Section 4: Outlook 34 | FCTG
Slide 35: FY24: Outlook
FY24: Outlook Further recovery expected Trading Update Full industry recovery expected in CY24 & passenger numbers set • Performing in line with expectations in early FY24 trading to double by 2040 (3.4% CAGR) [Source: IATA Global Outlook for Air Transport - June 2023] • Strong TTV & profit growth t
Slide 36: FY24: Market Conditions
FY24: Market Conditions Continuing to monitor trading environment (like all companies) - yet to see any noticeable demand downturns A Highly Resilient Sector Historically • Travel a highly resilient sector & typically a priority spend area – evidenced by long & consistent growth trajectory globally
Slide 37: Potential Benefits From China Travel Reawakening
Potential Benefits From China Travel Reawakening Chinese carriers rebuilding international capacity but still weighted more heavily toward domestic than in 2019 1 International capacity gradually taking off 2 Australia set to benefit • Chinese carriers gradually rebuilding international capacity – n
Slide 38: FY24: Pent-up demand
FY24: Pent-up demand International travel yet to fully take-off • Solid demand rebound since border restrictions were lifted, but still lagging historical highs & domestic travel recovery • For example: • In Australia during CY19, short-term resident departures equated to 45% of the country's popula
Slide 39: END OF PRESENTATION
END OF PRESENTATION QUESTIONS?
Slide 40: Appendix 1: Five-year result summary
Appendix 1: Five-year result summary
Slide 41: Appendix 2: Segment results
Appendix 2: Segment results The "Other" business segment includes contributions from TP Connects, Pedal Group, Avmin, Touring, Discova, Cross Hotels, GOGO, India FX & certain head office costs that have not been distributed to the leisure or corporate businesses. The prior year comparative has been
Slide 42: Appendix 3: Geographic Segments
Appendix 3: Geographic Segments EMEA TTV: $3.8b – up 83.6% Underlying EBITDA: $82m AMERICAS Underlying PBT: $72m Highlights: TTV: $4.8b – up 80.7% • Strong performance, Underlying EBITDA: $50m particularly in UK SME Underlying PBT: $24m business. ASIA Highlights: • FCM Germany start-up now TTV: $1.6
Slide 43: Appendix 4: Australian short-term resident departures as a percentage of FY19
Appendix 4: Australian short-term resident departures as a percentage of FY19 ▪ Circa 80% recovery in short-term resident departures during FY23 ▪ Strong finish to the year (97% recovery in June 2023)
Slide 44: Environment Governance
Flight Centre Travel Group has a sustainability vision of “preserving and enriching a world worth seeing." Our purpose is to open up the world for those who want to see. As one of the world’s largest travel retailers and corporate travel managers, we recognise our responsibility to preserve the plac
Slide 45: Flight Centre Holidays
FLY, CRUISE & STAY THE MEKONG ‘T-night tinerary trom Syaney x m7 ems Hf i) WHY IT'S GREAT VALUE v Return international flights &@ night cruise onboard a premium fiver ship & 4-night post-cruise stay in Siem Reap Premium aining onooara with complimentary beverages” [18 Sion hen Andra. peng han x ont
Slide 46: Japan Signature Itinerary
Japan Signature Itinerary These bespoke itineraries have been carefully curated by our expert Product team and are exclusive to Travel Associates. 46
Slide 47: Appendix 5: Glossary
Appendix 5: Glossary ABV = Average booking value PCP = Prior corresponding period Avg = Average PPE = Property, plant & equipment BDM = Business development manager Profit margin = PBT as a percentage of TTV BPS = Basis points Revenue margin = Revenue as a percentage of TTV CRM = Customer relationsh
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